Release Date: July 11, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Arjo AB (FRA:A39, Financial) reported a 3.0% organic net sales growth in Q2 2025, supported by a significantly stronger order intake.
- The North America business, particularly the US, showed double-digit organic growth, driven by strong demand across product categories.
- Several European countries, including France, Germany, and Italy, experienced good demand and strong organic net sales growth.
- The company has been successful in implementing cost efficiency measures, which are beginning to show positive effects.
- Arjo AB (FRA:A39) maintains a strong order book, indicating a promising outlook for the second half of 2025.
Negative Points
- Global sales were held back due to difficult comparisons with the previous year, particularly in the UK, which experienced weaker-than-expected sales.
- Gross margin slightly decreased to 43.4% from 43.6% last year, impacted by currency and US tariff headwinds.
- Adjusted EBITDA decreased to SEK475 million from SEK496 million in Q2 2024, primarily due to currency and US tariff headwinds.
- Operating cash flow was SEK205 million, down from SEK344 million in Q2 2024, due to a buildup in working capital and lower EBIT.
- The company faced a temporary cash flow impact of SEK50 million due to a VAT settlement, affecting cash conversion rates.
Q & A Highlights
Q: Can you discuss the potential for further cost reductions for the remainder of the year and the possibility of keeping operating costs flat?
A: We will continue our efforts to manage operating expenses. The organic OpEx increase year-over-year in Q2 was 2.1%, which is slightly better than expected. We aim to keep OpEx to sales flat for the full year.
Q: Could you quantify the strong order growth and backlog mentioned?
A: While we don't report specific figures, the order growth is significantly stronger than last year, and we emphasize this in our communication.
Q: What caused the weaker UK sales, and do you expect improvement in the second half?
A: UK sales were weaker due to delays in larger orders, likely due to NHS reorganization. We expect these orders to be fulfilled in Q3, which should improve the situation.
Q: Are there any tariffs on shipments to the US from Canada and the Dominican Republic?
A: Canada is exempt from tariffs, but we pay a 10% base tariff on shipments from the Dominican Republic. We hope the free trade zone might exempt us in the future.
Q: Can you provide insights into the gross margin outlook based on the current backlog?
A: We are pleased with the order book, particularly in patient handling, but cannot provide specific guidance on gross margin development for the second half.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
